What was the yield to maturity of the bond

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Reference no: EM13816984

The Jimmy Corporation issued a new series of bonds on January 1, 1996. The bonds were sold at par ($1000), have a 12% coupon rate, and mature in 30 years, on December 31, 2025. Coupon interest payments are made semi annually (on June 30 and December 31).

(a) What was the yield to maturity (YTM) of the bond on January 1, 1996?

(b) Assuming that the level of interest rates had fallen to 9%, what was the price of the bond on January 1, 2001, five years later?

What was the current yield at that date?

Reference no: EM13816984

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